Schaeffer's Midday Options Update Features Apple Computer, Microsoft, Monsanto, PMC-Sierra, and Guidant.

CINCINNATI -- Today's Schaeffer's Midday Options Update features Apple Computer (NASDAQ:AAPL), Microsoft (NASDAQ:MSFT), Monsanto (NYSE:MON), PMC-Sierra (NASDAQ:PMCS), and Guidant (NYSE:GDT). The Midday Options Update contains a brief commentary on the day's most notable activity and a table listing the most-active calls and puts for the day. The Midday Options Update is published every day at www.SchaeffersResearch.com - the home of Bernie Schaeffer and Schaeffer's Investment Research. For additional information about this report or to have it delivered to you free via email every day click on the following link. http://www.schaeffersresearch.com/redirect.aspx?CODE=PRMOU12M&PAGE=1 .

Options Update: Computer Sciences Jumps on Acquisition Expectations

This morning, the Institute for Supply Management (ISM) reported that nonmanufacturing sectors of the U.S. economy accelerated during March. The ISM nonmanufacturing index moved to 60.5 percent from 60.1 percent in February. Economists were expecting the index to drop to 59.5 percent. New orders increased to 59.5 percent from 56.2 percent while the employment index dropped to 54.6 percent from 58.2 percent. The price index fell to 60.5 percent from February's reading of 64.8 percent, indicating that inflation pressures waned.

This One Time, at Boot Camp 

Apple Computer (NASDAQ:AAPL) advanced more than six percent this morning after unveiling a new software application, named Boot Camp. The new software enables AAPL's Mac computers, which are based on Intel (INTC) processors, to run Microsoft's (NASDAQ: MSFT) Windows XP operating system. Boot Camp is currently available for download in a public beta version that will be a feature in Leopard, the next major release of AAPL's own Mac OS X operating system. The software is a preview version licensed for use on a trial basis for a limited time, and AAPL stated that it won't provide support for installing or running Boot Camp.

Making MON-ey?

This morning, Monsanto (NYSE:MON) reported second-quarter earnings of $1.60 per share, topping expectations for earnings of $1.52 per share. The better-than-expected results were driven by high sales of corn seeds and traits as well as soybeans. MON's $1.4-billion deal to acquire Seminis, announced in January 2005, contributed $148 million in vegetable sales. Unfortunately, the company's line of Roundup and other herbicides saw sales drop to $427 million. MON affirmed a 2006 earnings outlook at the upper end of its $2.35 to $2.50 per share range. The consensus estimate currently stands at $2.61 per share.

Sierra Mist

After the market closed yesterday, PMC-Sierra (NASDAQ:PMCS) announced that it plans to acquire privately held Passave for $300 million in stock, in a deal expected to enhance PMCS's product line. In addition, the company affirmed its February outlook for first-quarter revenue of $85 million to $88 million, which is higher than the consensus estimate.

Most-Active Options Update

At 2:06 p.m. eastern time, the Dow Jones Industrial Average (DJIA - 11,227.5) is up 0.21 percent. The S&P 500 Index (SPX - 1,310.24) has added 0.33 percent, and the Nasdaq Composite (COMP - 2,357.1) has tacked on 0.51 percent. At 2:07 p.m. Eastern time, 3,235,995 calls have changed hands compared to 1,776,020 puts, equaling a single-day put/call volume ratio of 0.54. The CBOE's equity put/call volume ratio weighed in at 0.83.

Guidant

On March 31, shareholders approved a merger between Boston Scientific (BSX) and Guidant (NYSE:GDT). BSX's purchase seems appears ready to close in the middle of the month. Today, the medical-device maker has dropped on news coming from St. Jude (STJ), which announced that the heart defibrillator market may be cooling off a bit. In response to this news, the entire sector of medical-device makers has dropped, including GDT's loss.

Technically, GDT is in a bit of a short-term downtrend, but it has rebounded off its 50-day moving average today. The last time the equity closed a month below this trendline was at the beginning of December. While the shares are below their 10-day moving average, they may also rely on the support of the 75 level. Since the beginning of the year, GDT has finished below this level just 16 times.

Looking on a monthly basis, GDT's 10-week moving average is also providing a bit of support. This trendline has provided support for the stock since the second week of December. Again, GDT is in a bit of a short-term downtrend, but it is relying on the support of its 10-week trendline. What's more, moving out to this longer span allows us to see exactly how long the 75 level acted as resistance. Notice that said resistance turned away GDT in 2004. Moving out further, pulling up a monthly chart, you will notice that this level shunned the shares back in March 2000 forming a long-term "double-top" formation. Remember that prior levels of resistance can often switch roles and act as support when given the chance.

Let's look at the sentiment backdrop of GDT:

--Percent of analysts tracked by Zacks who rate the stock with a "hold" or worse: 100%

--Number of analysts tracked by Zacks: 17

--Short interest as a percent of float: 2.34

--Short-interest ratio: 2.45

--Schaeffer's put/call open interest ratio (SOIR): 1.15

--SOIR percent rank: 46%

--Overall Schaeffer's Equity Scorecard rating: 7.0

While GDT's Schaeffer's put/call open interest ratio (SOIR) percentile ranking is actually on the optimistic side of the spectrum, it's reading of 1.15 indicates that there are more puts outstanding than calls in the April and May series (GDT does not trade June options).

The shares are very attractive when looking at the analysts' rankings. According to Zacks, all 17 of the analysts rate it a "hold" or worse. Any upgrades from this pessimistic crew could provide a boost for the shares.

GDT's Schaeffer's Equity Scorecard reading of 7.0 out of 10 hints that it should find less resistance to an upside move. Looking at options, the in-the-money April 75 call (GDT) with an ask price of 3.40 could be an attractive short-term investment. One caveat is that today's notable volume (at the April 80) is out of the money and could signify more structural resistance, in the event that these positions are being added.

Monthly chart of INTC Since January 2000 With 10-Month and 20-Month Moving Averages: http://www.schaeffersresearch.com/wire?ID=15721 .

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About Schaeffer's Investment Research (www.SchaeffersResearch.com)

Schaeffer's Investment Research, founded by Bernie Schaeffer in 1981, is a financial information and trading resources company. It publishes Bernie Schaeffer's Option Advisor, the nation's leading options subscription newsletter. The firm's contrarian approach focuses on stocks with technical and fundamental trends that run counter to investor expectations. The firm's website, http://www.SchaeffersResearch.com , is recognized as one of the leading information sources for stock and options traders and was cited as the top options website by both Forbes and Barron's. Click here for more details about Schaeffer's trading methodology: http://www.SchaeffersResearch.com/method .